Comment by froindt | Hacker News Reader

Comment by froindt | Hacker News Reader

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We have "rewards" on our credit cards. Rewards aren't free, so they increase the fees.

>For banks, the $91.2 billion in fees they earn on credit-card portfolios is now more than the interest they charge on the loans.

The fees are ridiculous. Profit margins at restaurants are often 3-5% (per Google). There is still a cost to handling cash, but if cash cost ~1% all-in, their profits would go up 20-30%, just like that, assuming consumption stayed the same.

Fast food venues didn't accept credit cards for a long time, but eventually found people spent more paying with a card than cash. A $300 TV and a $5 hamburger "feel" exactly the same with cards, which certainly doesn't help consumerism in the US.

As an example, when I pay my property taxes, I can either pay by sending a check in the mail, doing an electronic check (ACH transfer that takes 2-3 business days to clear) and paying $0.25, or pay a 2% transaction fee. Stamps are $0.50, eventually I'll need to reorder checks (at a cost), so I do the ACH transfer.

I’ve been all in on using my banks bill pay system for a number of years now for property tax / water bill / etc. Stamps & check books cost money, but scheduling someone else to cut the check, stamp and envelope it, and stick it in the mail on a certain date is free. It boggles the mind.

Your bank's bill pay involves someone sending a physical check?

In Canada, we have "bill pay" for utility, property tax, credit card, etc. but all that happens is your bank transfers money to the biller's account. The biller pays a bit for this service but evidently much less than the cost of handling physical checks as I've never seen a surcharge for it. Even the small town of 3,000 I live in is set up to receive property tax and water payments through this system.

I think it depends, banks can have an established relationship with a utility or service that will accept bill pay as an ACH. At least with my bank, I can setup a bill pay for anybody. I just need to provide a name, address and account number. If I do this for someone the bank isn't familiar with, they send a check in the mail.

In the early 2010s I worked for Fiserv, who at the time provided "online bill pay" services to about 80% of US banks (I don't recall if they're in Canada or not). The overwhelming majority of the bank customers using that service held beliefs similar to what you expressed... it's an online payment through my bank, why on earth would it be a paper check?? They were wrong. The really fun thing about that system was that the customer had absolutely no way to tell what kind of payment the system was going to send to a given payee. A payment that processed electronically for years could suddenly go as a physical check for any number of reasons. Maybe the customer changed something that was slightly incorrect... maybe they should have changed something but didn't... maybe the system just had a hiccup that day.

Regardless of who makes your bill pay service or exactly how it works, my main advice if you use any bill pay service is to ready the fine print very closely and be sure you understand what you have to do to be covered (late fee reimbursement, etc) if a payment does get screwed up.

Don't read the fine print, it's always bad ("we'll charge a fee if we want") and you can't avoid it (no free market for competitors) and knowing it only increases your risk liability.

It’s hit or miss, some utilities/bills are handled in the bill pay system as bank transfers, but other utilities they fall back to issuing checks. For me I’d say it’s 50/50, in a 500k person county.

We have a national payment card system in Denmark (Dankort). Depending on the number of transactions a business has. A business can pay down to $0.03 per transaction.

Obviously, Visa and Mastercard are trying to see if they can ruin the system.

Same in Portugal (multibanco)

Several of my credit cards rebate at 2%, so I’ll use the card for anything that charges a credit card processing fee up to 2%, even more if I can avoid a stamp, envelope, and the time involved mailing it.

I just paid some property taxes with one instead of ACH; keeps all of my accounting in one place in the card, and the payment is immediate instead of waiting for the ACH payment to wind its way through the antiquated Fed plumbing. Anyone who won’t take a CC, I’ll use Plastiq; they cut a check, I pay the CC fee, but it’s still rebated back.

Your property taxes don't charge a credit card fee? That's graft of the higher order, handing tax payments over to payment processors. In my state that's illegal.

They do, but my rebate from my credit card is the same percentage, so it’s a wash. Sorry if my post didn’t make that clear!

But mega fast food chains must have negotiated the card fees to nearly zero, no?

No.

They are negotiating with very few entities: just 2 (Visa and MasterCard) account for most card holders. Throw in Amex, and Discover if you want and you've covered nearly 100%.

Merchants don't have a lot of negotiating power, so they are really not in a position to dictate prices. Visa and MasterCard are in a position to dictate prices.

Depends on the territory. In Hong Kong all major credit cards plus several local payment processors plus WeChat and AliPay are accepted at McDonald's, for example.

They regularly do crossovers and promotions to encourage people to use the cheaper ones.

Which means they are an illegal monopoly/trust and should be regulated.

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